AndreTaxCo, PLLC

Ohio Cannabis & Hemp Industries 

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IRC § 280E Analysis / R&D Tax Credit Eligibility

• Does Section 280E Apply to state individual income tax?

  • Yes. Ohio conforms to the Internal Revenue Code. The starting point is Federal Adjusted Gross Income. There is no provision that states Section 280E does not apply.

• Does Section 280E apply to state corporate income tax?

  • N/A – Ohio does not have a corporate income tax.

• Are State R&D Tax Credits Potentially Eligible for "Plant Touching" (e.g. producers, cultivators, manufacturers, retailers) Cannabis Companies?

  • No​, subject to further 280E restrictions. 

• Are State R&D Tax Credits Potentially Eligible for Industrial Hemp Companies & "Non-Plant Touching" Separate Trade or Businesses (e.g. testing laboratories)?

  • Yes​, subject to further 280E analysis regarding company activities, structure, and applicable state laws.

• See Ohio R&D Credit Summary​

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State Law Background

(1) Hemp State Law Authority & Background​ 

• SB 57    

  • Decriminalizes hemp by excluding from the definition of marijuana in the controlled substance laws.

  • Directs the Ohio Department of Agriculture to create and administer a hemp program for cultivation and processing, including licensing, application fees, testing and other regulations.

  • Allows universities to cultivate and process hemp.

  • Establishes a hemp marketing program.

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(2) Medical Marijuana State Law Authority & Background

• Statutory Language (year) - HB 523 (2016) Approved by legislature, signed by governor 6/8/16

  • Patient Registry or ID cards - Yes

  • Allows Dispensaries - Yes

  • Specifies Conditions - Yes

  • Recognizes Patients from other states - Details pending, but will require reciprocity

  • State Allows for Retail Sales/Adult Use – N/A

• Are sales of medical marijuana subject to sales tax?

  • Yes, sales of medical marijuana are likely subject to sales tax. Medical marijuana is not available under a prescription (the patient receives a recommendation from a physician), so the exemption for prescriptions may not apply.

• Is medical marijuana subject to an excise tax?

  • No.

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(3) Recreational Marijuana State Law Authority & Background​​​ - N/A​

• Are sales of recreational marijuana subject to sales tax?

  • N/A.

• Is recreational marijuana subject to an excise tax?

  • N/A.

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(4) Does the State impose a Stamp Tax or Controlled Substances Tax?

• No.